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Beware of advertisements for "advance-fee" or "guaranteed" consumer
and small-business loans. This brochure tells how to recognize ads
for advance-fee loan scams and how to distinguish them from offers by
legitimate credit grantors. It also tells you how to protect
yourself, what to do if you are a victim, and where you can find low-
cost help in dealing with credit problems.

How to Recognize an "Advance-Fee" Loan Scam

Advertisements that promise loans generally appear in the classified
section of local and national newspapers, magazines, and tabloids.
They also may appear in mailings, radio spots and on local cable
channels. Often "900" numbers that result in charges on your phone
bill, or toll-free "800" numbers, are featured in the ads. However,
simply advertising through recognized media outlets does not ensure
the legitimacy of the company behind an ad. In addition, such
companies often use delivery systems other than the U.S. Postal
Service, such as overnight or courier services, to avoid detection
and prosecution by postal authorities.

Some companies claim they can guarantee you a loan for a fee paid in
advance. The fee may range from $100 to several hundred dollars.
Small businesses have been charged as much as several thousand
dollars as an advance fee for a loan. But whether you are an
individual consumer or a small business owner, the result is the
same: once the con artists have your money, they disappear and you
never get your loan.

Do not confuse advance-fee loan schemes with legitimate offers of
credit from mortgage brokers, banks, savings and loans, and credit
unions. Legitimate credit grantors may charge fees to process your
loan application, but they will not guarantee that you will qualify
for a loan. Illicit advance-fee loan schemes, on the other hand,
either promise or strongly suggest that a loan will be provided in
exchange for an up-front fee. Salespeople for such companies also may
verbally promise that some or all of your advance fee will be
refunded if your application is unsuccessful. Some fraudulent
companies also may claim that your advance fee will be credited
toward repayment of the loan. Usually none of these claims is true.

How to Protect Yourself

The FTC suggests the following precautions before you respond to ads
for advance-fee loans.

* Be wary of advertising that claims that bad credit is no problem
in getting you a loan. If money is not available to you through
traditional lending institutions, it is unlikely to become available
in response to a classified ad.

* Be cautious of lenders who use "800" and "900" numbers.
You may call an "800" number which then directs you to dial a "900"
number. You pay for "900" number calls, of course, and the charges
may be high.

* Check out the company. Contact your local consumer protection
agency and the state Attorney General's Office to learn if they have
received any complaints about companies offering advance-fee loans.
Keep in mind, however, that suspect companies often establish their
operations in one state, advertise heavily for only a few months,
collect their loan fees, only to close up shop and move on to another
state before complaints are registered and local authorities have a
chance to act. Therefore, just because your local consumer protection
agency has no complaints on file does not mean that an advance-fee
loan business is legitimate.

* Be careful about making any loan agreements over the telephone.

* Do not give your credit card, checking account, or Social Security
numbers over the phone unless you are familiar with the company. This
information can be used against you with other frauds. For example,
if you give your checking account number over the phone to a stranger
for "verification" or "computer purposes," the number may be used to
debit (withdraw) money from your checking account.Ask to review any
company's offer in writing, and make sure you understand the terms of
the agreement before you complete the transaction.

What to Do if You Are a Victim

If you believe you have been victimized by a fraudulent advance-fee
loan operation, contact your local consumer protection agency, Better
Business Bureau (BBB), state Attorney General and Call For Action
(202/537-0585; TDD 202/537-1551) to report the company.

You also may file a complaint with the FTC by writing
to: Correspondence Branch, Federal Trade Commission,
Washington, D.C. 20580. Although the FTC generally does not intervene
in individual disputes, the information you provide may help to
indicate a pattern of possible law violations requiring action by the
Commission.

Where to Find Low-Cost Help for Credit Problems

First, try to solve your debt problems with your creditors as soon as
you realize you will not be able to make your payments. If you cannot
resolve your credit problems yourself or need additional assistance,
you may want to contact a Consumer Credit Counseling Service (CCCS)
office -- a nonprofit organization with more than 850 offices located
in 50 states that counsels indebted consumers. CCCS counselors will
try to arrange a repayment plan that is acceptable to you and your
creditors. They also will help you set up a realistic budget and plan
for expenditures. These counseling offices, funded by contributions
from credit-granting institutions, are offered at little or no cost
to consumers. Check the White Pages of your telephone directory to
get the number for the CCCS office nearest you, or call 1-800-388-
2227 using a touch-tone phone. If you have other questions, write or
call:

In addition, non-profit counseling programs sometimes are operated by
universities, military bases, credit unions, and housing authorities.
They are likely to charge little or nothing for their assistance. Or,
you can check with your local bank or consumer protection office to
see if it has a listing of reputable, low-cost financial counseling
services.

Facts for Consumers from the Federal Trade Commission in cooperation
with Call For Action, Inc., a Washington, D.C.-based international
network of radio and television consumer hotlines

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